The government will begin issuing licenses to private companies in its fragile pension sector next month as a step forward to end monopoly of pension sole player- Rwanda Social Security Board-RSSB.
Central Bank, sector’s regulator says that the entrance of private companies will create competitiveness within the sector and likely to bolster savings as well as accessibility of the pension services in the country.
“We expect that licensing of private pension players will boost savings mobilization in the country as well as access to finance,” John Rwangombwa, Governor of the Central Bank told Rwanda Eye.
The issuance of the license also comes after enactment of the pension law by parliament in 2015 which also saw Central Bank putting in place pension regulation this month.
the pension sector together with the stock market and digital banking have been highlighted by Government as some of the channels to help boost savings thus boost domestic resource mobilization.
With only Rwanda Social Security Board- RSSB as key player in the sector, the number of employees under the scheme increased to 398,987 in the first half of 2016 up from 397,664 in the same period under review.
Accordingly, the RSSB is a government body established in 2010 by law after the merger of Social Security Fund of Rwanda and Rwanda health Insurance Fund-RAMA, providing both pension and insurance services.
Under its Rwanda financial sector strategy 2013-2018, the government underlined key priorities to support financial sector growth mainly focusing at mobilizing savings and investments through licensing of private pension companies, strengthening capital market, access to finance, financial inclusion, among others.
“This will meet the social objective of facilitating retirement savings, as well as playing an important role in mobilizing long term savings and contributing to capital market development, “ said Amb Claver Gatete, Minister of Finance and Economic planning.
Central bank statistics indicate the sector provides a warm outlook for investors with its assets growing by 7 percent to Rwf 567 billion up from rwf 529 billion between June 2015 and June 2016.
The increase, Governor Rwangombwa says is “Mainly attributed to additional investments made from pension contributions that increased from rwf61 billion to Rwf 68 billion.”
The sector recorded an increase by 6 percent in total benefits to Rwf 15.9 billion up from Rwf 15 billion in the period between June 2015 and June 2016 while investment income increased by 36 percent from rwf 25 billion to Rwf 34 billion mainly due to income earned from investments in fixed term deposits and treasury bill bonds.